Charts of the Day: Europe’s Phony “Austerity”

“Austerity” has become a very controversial political term. Politicians, bureaucrats and academics have been brawling over semantics and statistics. 

We are made to believe that "austerity" has all been about controlling and managing debts through fiscal deficits, or of reining government spending coupled by raising taxes and of more regulations.

Let us see from the mainstream perspective the state of “Austerity” in the Eurozone. 

Note: reference point matters. The period below covers 2007 or at the advent of the US crisis until 2012

The Zero Hedge gives us the following wonderful bar charts of the real state of “Austerity” in the Eurozone

Since 2007, government spending has ballooned over the Eurozone except for Iceland and Hungary.  Austerity, where?

Over the same period, public debt has also been expanding. Austerity where?

Even from the mainstream framework, the Eurozone has hardly implemented “Austerity”. No fiscal discipline enforced, debt has ballooned. Yet blaming phony austerity for economic woes represents nothing more than strawman.

The reality is that media, politicians and mainstream has fudged the essence of austerity. 

Austerity is not only about fiscal discipline, but more importantly about economic freedom or allowing the marketplace to direct resources from low value uses to higher value uses. This should go at the expense of government’s access on these limited resources. 

In other words, austerity is about productivity growth from economic freedom.